Estate of Wooters ex rel. Klein v. Goujjane, 02 Civ. 9734(SAS).
| Citation | 305 F.Supp.2d 280 |
| Decision Date | 02 October 2003 |
| Docket Number | No. 02 Civ. 9734(SAS).,02 Civ. 9734(SAS). |
| Parties | THE ESTATE OF F. Adele WOOTERS, by and through its co-personal representatives, Ruth KLEIN and Janice W. Bruce, Individually and in their capacities as Distributees of the Estate of Armand Braiger, Ruth Klein, Individually, and Leonore Spinell, Individually and in her capacity as Distributee of the Estate of Armand Braiger, Plaintiffs, v. Noury GOUJJANE, Individually and in his capacity as Preliminary Executor of the Estate of Armand Braiger, Roseanne Manetta, Rapa Nui, Inc., Rapa Nui Realty, Corp., and Teloca Realty, Corp., Defendants. |
| Court | U.S. District Court — Southern District of New York |
Kevin T. Mulhearn, Kevin T. Mulhearn, P.C., Orangeburg, New York City, for Plaintiffs.
Donald Novick, Schwartzapfel, Novick, Truhowsky & Marcus, P.C., Huntington, New York, for Defendants.
This action is brought by distributees of an estate who allege that the preliminary executor of the estate fraudulently transferred and converted stock shares in three closely held corporations, thereby depleting the estate's assets. Plaintiffs are the Estate of F. Adele Wooters ("Wooters Estate") by its representatives Ruth Klein and Janice W. Bruce, Ruth Klein, and Leonore Spinell (collectively, "plaintiffs"). Defendants are Noury Goujjane, Roseanne Manetta, and Rapa Nui, Inc. ("Rapa"), Rapa Nui Realty, Corp. ("Rapa Realty"), and Teloca Realty Corp. ("Teloca") (collectively, "defendants"). This Court's jurisdiction is based on plaintiffs' claim that defendants have violated 18 U.S.C. § 1961 et seq., the Racketeer Influenced and Corrupt Organizations Act, and that consequently, they are entitled to civil damages under 18 U.S.C. § 1964(c). Plaintiffs also assert state law claims for common law fraud and conversion, invoking the Court's supplemental jurisdiction under 28 U.S.C. § 1367. A bench trial was held on September 23-24, 2003. Pursuant to Rule 52(a) of the Federal Rules of Civil Procedure, the Court makes the following findings of fact and conclusions of law.
I. FINDINGS OF FACT
Armand Braiger, Leonore Spinell and F. Adele Wooters were siblings. Braiger was the co-founder and proprietor of the landmark restaurant, "One If By Land, Two If By Sea" ("the restaurant"), located at 17 Barrow Street in New York. Braiger died on August 20, 1999. F. Adele Wooters died on October 20, 1999. Wooters is survived by her two children, Ruth Klein and Janice W. Bruce, who serve as the co-personal representatives of the Wooters Estate. Spinell is Braiger's sole surviving sibling. The Wooters Estate and Spinell are distributees of the Braiger Estate.
Rapa Realty is the title owner of 17 Barrow Street, and Teloca is the title owner of 19-21 Barrow Street. At the time of Braiger's death, Teloca was also the title owner of unit 1405 in Mystic Point Tower in Aventura, Florida. Teloca has since sold that condominium unit for approximately $117,000.1
Goujjane is the preliminary executor of the Braiger Estate and, pursuant to Braiger's will, the largest beneficiary of the estate. However, because Braiger's will is the subject of a contested probate proceeding, it has not been admitted to probate, Goujjane has not been named executor, and the estate's assets have not been distributed.
Goujjane met Braiger in 1992 and shortly thereafter became employed by Rapa, the corporate and business entity for the restaurant. The two men had a very close personal relationship. They spoke on a daily basis, and when Braiger was in New York, they saw each other daily. Braiger and Goujjane bought property together in New York and Florida, and their families spent holidays together.
Braiger trusted Goujjane both with his business and his health. To that end, in July 1999, Braiger executed a durable power of attorney that authorized Goujjane to act on Braiger's behalf in business and personal matters. Also in July 1999, Braiger executed a health care proxy that authorized Goujjane to make health care decisions for Braiger in the event that Braiger became incapacitated. Although Braiger and Goujjane were not related biologically, the bond between them was stronger than that between Braiger and his family.
As early as 1995, Braiger expressed his desire to have Goujjane succeed him as owner of the restaurant. Accordingly, Braiger executed a will that left his shares of Rapa, Rapa Realty and Teloca to Goujjane. Notably, Braiger's will designated Goujjane as the beneficiary of nearly all of Braiger's estate, and, in the event that Goujjane predeceased Braiger, Goujjane's children were to be the beneficiaries. Braiger also provided for Goujjane through an irrevocable trust that was executed in December 1995. The trust afforded substantial benefits to Goujjane both during Braiger's lifetime and after his death.
Braiger told lawyers, friends and employees that after he died, he wanted Goujjane to take over the restaurant. In 1998, he transferred 10 percent of the shares of Rapa to himself and Goujjane as joint tenants with the right of survivorship. Before his death, Braiger met with an attorney and took steps to transfer the remaining 90 percent of Rapa's shares to himself and Goujjane as joint tenants with the right of survivorship. Specifically, on July 26, 1999, Braiger, through an attorney, submitted a corporate change application for Rapa to the New York State Liquor Authority, stating that he was seeking to transfer his remaining shares of Rapa to himself and Goujjane as joint tenants, and that the transfer constituted a gift without consideration.2 The Court has no doubt that before his death, Braiger wanted all of Rapa's shares to be owned by Braiger and Goujjane jointly with the right of survivorship, and that upon his death, Braiger wanted Goujjane to own all of the shares of Rapa Realty and Teloca.
In May 1999, Braiger, who was then 68 years old, was hospitalized in Florida for diverticulitis. Subsequent testing showed that Braiger's arteries were blocked, and he underwent bypass surgery. Though he remained hospitalized until his death on August 20, 1999, his condition was not considered life-threatening until the four days preceding his death.
While in the hospital, Braiger made daily telephone calls to Goujjane and Manetta, the restaurant's general manager, and both Goujjane and Manetta traveled from New York to Florida to visit him. Braiger continued to participate in the affairs of the restaurant and deal with his personal matters. Thus, during his hospital stay, Braiger met with attorneys and executed both the durable power of attorney and the health care proxy.
As of August 3, 1999, Braiger owned all 100 issued stock shares of Rapa Realty, all 20,000 issued stock shares of Teloca, and 180 shares of Rapa's 200 issued shares. The remaining 20 shares of Rapa were owned by Goujjane and Braiger as joint tenants with the right of survivorship pursuant to a transfer that was effected on November 23, 1998.
On August 4, 1999, during his hospitalization, Braiger had several telephone conversations with Manetta and Goujjane, who were at the restaurant in New York. Sometime after the August 4 telephone conversations, Manetta drafted corporate minutes for Rapa, stating that (1) on August 4, 1999, the corporate books were in the custody of attorney Mark Glick; (2) Braiger and Goujjane had offered to surrender their respective shares of Rapa; and (3) all 200 shares would be reissued to Braiger and Goujjane as joint tenants with the right of survivorship. Also sometime after the August 4 conversations, new stock certificates were issued for Teloca, Rapa and Rapa Realty. The new certificates were all dated August 4, 1999, and identified the registered holders of the stock as Braiger and Goujjane, joint tenants with the right of survivorship.3 Defendants concede that the certificate for Rapa was not issued on August 4, 1999, but was issued on a later date and backdated. The Court makes no finding with respect to whether the certificates for Teloca and Rapa Realty also were backdated.
Although Goujjane and Manetta visited Braiger in the hospital after August 4 1999, they did not bring him any documents related to the stock transfers, and Braiger himself never signed any documents related to the transfers. Moreover, Goujjane and Manetta did not discuss the transfers with any of Braiger's attorneys until after Braiger's death, and there is no evidence that Braiger discussed the transfers with any of his attorneys while he was hospitalized.
III. CONCLUSIONS OF LAW
Under New York law, which the parties agree governs the state claims, there are three requirements for a valid inter vivos gift: (1) intent on the part of a donor to give; (2) delivery of the property given pursuant to such an intent; and (3) acceptance on the part of the donee. See Matter of Szabo, 10 N.Y.2d 94, 98, 217 N.Y.S.2d 593, 176 N.E.2d 395 (1961). The second element, delivery, requires a "change of dominion and ownership; intention or mere words cannot supply the place of an actual surrender of control and authority." Id. (quoting Vincent v. Rix, 248 N.Y. 76, 83, 161 N.E. 425 (1928)). Where stock certificates are the subject of the gift, a symbolic delivery is sufficient if it is the only type of delivery that is practicable, but even a symbolic delivery "must proceed to a point of no return, and this can only be reached when there is a transfer of record on the stock books of the company." Szabo, 10 N.Y.2d at 98, 217 N.Y.S.2d 593, 176 N.E.2d 395.
"The proponent of a gift has the burden of proving each of [the elements of an inter vivos gift] by clear and convincing evidence." Gruen v. Gruen, 68 N.Y.2d 48, 53, 505 N.Y.S.2d 849, 496 N.E.2d 869 (1986) (...
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